Tangedco wants industry to give up legacy concessions

G Balachandar Chennai | Updated on October 17, 2019 Published on October 16, 2019

Vikram Kapur, CMD , Tangedco and Additional Chief Secretary, Government of Tamil Nadu   -  Bijoy Ghosh

Tangedco continues to be in deep financial distress despite several efficiency improvement measures, says Chairman and Managing Director

The Tamil Nadu Generation and Distribution Corporation wants the power industry to forego certain legacy concessions in order to turn healthy, and for the benefit of all stakeholders, as the utility continues to grapple with massive debt despite its efforts to cut losses and improve revenues.

“Tangedco continues to be in deep financial distress despite several efficiency improvement measures. It is time to revisit the concessions the industry has been enjoying historically. This has to be done in order to make the utility healthy which is essential for the benefit of all stakeholders,” Vikram Kapur, Chairman and Managing Director, Tangedco and Additional Chief Secretary, Government of Tamil Nadu, said here on the sidelines of a CII meeting on Tuesday.

He felt that some of the legacy concessions such as banking of energy, open access and group captive status were causing huge stress and are a heavy financial burden to the Discom (Tangedco).

Legal tangle

“People who claim group captive status don’t allow us to verify. If we verify, most of them will not be eligible for concessions such as waiver of cross-subsidy surcharge, which is a substantial portion per unit. The moment we attempt to verify, they get a stay from the court and litigation takes its own time and we are losing a lot of money,” he added.

In open-access system, the state government advisory is to restore the floor level of 1 MW demand for consumers enjoying open access, in line with the provisions in the Electricity Act.

“But some people have gone to the court and for the past two years, we have not been able to get the stay vacated. I confess that we are not able to make much headway in these areas. This is where the industry can partner with us. Maybe it is time to give up these concessions they have been enjoying. Unless these concessions are revisited entities like Tangedco will never be commercially viable and they will not able to service the industry and customers. It is in our mutual interest to ensure that we sit across the table and try to relook at the concessions. Unless Tangedco is taken back to health, it will take the industry downhill,” he said.

UDAY experience mixed

Kapur earlier explained that Tangedco’s UDAY experience has been mixed.

“There were some initial gains. Unfortunately, we are seeing some plateauing of these. We are slipping back on the trajectory that was promised or assured. Despite making several improvements, various factors beyond our control continue to cause financial stress for Tangedco,” he said.

As most of the coal comes from domestic sources, Tangedco has no control on prices. Railways control freights and rates. Central power stations that provide 30 per cent of the power have a mechanism that leads to a regular increase in cost of power. “Also, we continue to expand projects across generation, distribution and transmission, capex is undertaken and that adds to the interest burden. Higher wages due to periodic settlements also cause huge burden,” he stated.

Gaja cyclone losses

Natural calamities from time to time wreak havoc on the State’s power infrastructure. Last year’s Gaja cyclone devastated the electrical infrastructure completely in four districts of Tamil Nadu.

“It was virtually re-electrification of nearly 66 lakh consumers and their infrastructure. It burnt a hole of nearly ₹2,500 crore in Tangedco and only one-fifth of it was reimbursed. Rest we had to bear,” he added.

Published on October 16, 2019
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